Unit 2

Bob, Barry, and Bonita Barnes have inherited a farm under the terms of their father's will. Bonita was named as executor. The estate attorney told the Barnes family that the probate process could take up to one year. All three Barnes children agree to sell the property as soon as possible. Bonita: Can join bob and barry in conveying the property to a 3rd party during the process Can sell the property as executor and keeps the funds for herself Must not allow the sale of the farm until the probate process is complete Cant profit from the sale of the farm because she is the executor

Can join bob and barry in conveying the property to a 3rd party during the process All three siblings inherit the property and will benefit from the proceed of a sale of property named in the will and property may be sold during the probate process. Bonita cannot keep all of the profits because we are told that all three siblings inherited the property. Bonita is allowed to keep her share of the profits, even though she is named as the executor.

A quitclaim deed is typically used in a real estate transaction for what primary purpose Transfer interest in a life estate Clear a cloud on a title Terminate an easement Any of the above

Clear a cloud on a title A quitclaim deed CAN be used to transfer any interest in real property from one party to another. It is primarily used to clear clouds on titles. With a quitclaim deed the grantor is passing title "as is" with no agreement to warrant or defend the quality of title in any way.

The purpose of a recording act is to Ensure title is marketable Raise revenue Create a local public record Protect property owners

Create a local public record Recording acts create local public records that are available for public inspection and ensures public notice of all recorded information.

A third party holds title to property through a Devise Quitclaim deed Bequest Deed of trust

Deed of trust A deed of trust is similar to a mortgage where a property owner enters into a contract to borrow money and voluntarily agrees to extinguish rights to the real property to the lender until fulfilling the terms of the debt. The deed of trust is typically a contract between three people, the borrower, the lender and a third party (trustee). The trustee holds the title to the property until the debt is paid off at which time the deed is transferred back to the owner/borrower

All of the following transfers would be considered involuntary alienation except Foreclosure Eminent domain Devise Adverse possession

Devise Alienation means to transfer property. A devise is a gift of real property through a will, which is a voluntary act. Foreclosure (when the lender takes over property) and eminent domain (when the government takes over the property) are involuntary. Adverse possession can only occur WITHOUT the true owner's permission.

The primary purpose of RESPA is to Guarantee housing for all purchaser Limit the amount of all settlement costs Provide capital for secondary markets Disclose all settlement costs

Disclose all settlement costs RESPA (Real Estate Settlement Procedures Act) limits who may conduct a real estate closing and imposes obligations on settlement agents which alleviate buyer confusion regarding the real estate closing process and closing costs. RESPA requires lender to provide borrowers with a Loan Estimate detailing settlement service charges the borrower will have to pay. RESPA also required lenders to provide borrowers with a Closing Disclosure which details services provided and actual fees charged.

When a written instrument or thing of value is held by a disinterested third party, but is handed over upon satisfaction of specified conditions Mortgage Escrow closing Bond

Escrow closing

One way to avoid a capital gains tax on property sale is to Sell the property for sale by owner (FSBO) Exchange the business or investment property under IRS code 1031 Exchange the residential property under IRS code 1031 Exchange the property with another type of property (rental home for commercial truck)

Exchange the residential property under IRS code 1031

What are fees charged for the privilege of buying or selling property in a particular jurisdiction Excise taxes Ad valorem taxes Special assessments None of the above

Excise taxes Excise taxes (also known as transfer and recording taxes) are fees charged by local jurisdictions for the privilege of buying or selling real estate in that jurisdiction. Transfer taxes are generally paid by the seller, grantor, or lessor and are usually based on the sales price of the property.

Which federal law authorizes the government to tax transfers by foreign persons? RESPA FIRPTA CERCLA None of the above, this would be a violation of fair housing laws

FIRPTA

Under what circumstances would a buyer receive a sheriff's deed For the purchase of a stigmitized property (murder occured) For the purchase of property with a cloud on the title For the purchase of property at a foreclosure sale A or b

For the purchase of property at a foreclosure sale A Sheriff's Deed is similar to a deed in foreclosure, which is presented to a buyer by the courts after a property is sold to satisfy a judgment. When anyone other than the delinquent borrower buys property at a public auction, they receive a sheriff's deed (also known as a referee's deed). A sheriff's deed functions to eliminate all unpaid junior liens against the property so that the purchaser may receive marketable title.

Chris defaults on his house loan and the lender wants to auction the property (which secures the loan) in order to satisfy his debt. This is known as: Forfeiture Short sale Foreclosure

Foreclosure

Chris defaults on his house loan and the lender wants to auction the property (which secures the loan) in order to satisfy his debt. This is known as: Short sale Foreclosure Forfeiture

Foreclosure

Which of the following deeds creates the most liability for a seller Special warranty deed Universal warranty deed General warranty deed Quit claim deed

General warranty deed The general warranty deed is the most complete of all deeds, it carries all the warranties of title and therefor the seller would incur the most liability. A quitclaim deed is the least complete in that it warrants nothing. A special warranty deed only warrants against defects which arose during the tenure of the grantor's ownership and not against previous title defects.

Which of the following clauses is least likely to be included in a mortgage Acceleration Habendum Alienation Defeasance

Habendum A habendum clause is found in a deed, not a mortgage. It is the clause that begins with "To have and to hold..." and describes how the property will be held by the new owner. All other items listed are generally included in the mortgage.

All of the following are exempt from RESPA except? Cash sales 8 unit residential property Home equity loans Loan to purchase a vacant lot

Home equity loans RESPA covers loans secured with a mortgage placed on a one-to-four family residential property, including most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. RESPA does not apply to: business purpose loans; temporary financing; loans to purchase vacant land; loan conversions; secondary market transfers; transactions financed solely by the seller; an assumption that doesn't require lender approval; a residential property consisting of more than four family units; or cash sales

A homeowner may claim which of the following items as deductions on his federal tax return Principal payments on the mortgage loan Interest payments on the mortgage loan Repairs and maintenance on the house Improvements made to the property

Interest payments on the mortgage loan Of the items listed, a homeowner may only deduct the interest paid on his/her mortgage loan.

A home inspection: Usually occurs before contract ratification Is the sole expense of the buyer Binds the seller to fix any repairs Can include items of preference

Is the sole expense of the buyer Borrower (buyer) fees include (but are not limited to): commissions, lending fees, escrow deposits, title charges, transfer taxes, surveys, and inspections.

Which statement is NOT true about title insurance? It will generally include exclusions for unrecorded easements The policy will include a list of title defects that are not insured It serves many of the same functions as homeowners' insurance It will insure the owner against losses arising from title defects

It serves many of the same functions as homeowners' insurance

In what proceeding must a lender file suit to recover the loss on a defaulted loan? Forfeiture Right of redemption Judicial foreclosure Short sale

Judicial foreclosure

In what proceeding must a lender file suit to recover the loss on a defaulted loan? Short sale Right of redemption Forfeiture Judicial foreclosure

Judicial foreclosure

In a foreclosure sale, what mind of deed does the mortgager receive Sheriff's deed Executor's deed Quitclaim deed None of the above

None of the above

In a foreclosure sale what kind of deed does the mortgagor receive? Sheriff's deed Executor's deed Quitclaim deed None of the above

None of the above This is a trick question, so read it carefully. The MORTGAGOR is the person that is in default. He is going to lose the property, therefore he would not receive anything. When anyone (other than the delinquent borrower) buys property at a public auction, they receive a sheriff's deed (also known as a referee's deed). A sheriff's deed functions to eliminate all unpaid junior liens against the property so the purchaser may receive marketable title

Jill agrees to sell a three-bedroom ranch to Jason. Per the sales agreement, Jill deposits the deed to the ranch in escrow. Subsequently, Jill dies. The ranch will most likely: Pass to jill's heirs provided she left a valid will Pass to the estate because the escrow terminates Pass to jason provided he satisfies the terms of the sales agreement Pass to jason if he is an heir of jill's

Pass to jason provided he satisfies the terms of the sales agreement Note that the relation-back doctrine establishes that the death of the grantor does not terminate escrow, and also authorizes the escrow agent to deliver the deed as instructed. Provided Jason satisfies the terms in the sales contract, Jill's death will not affect the transaction.

In the event of a dispute which deed clause would best state the extent of ownership Premises Testimonium Habendum Escalator

Premises While both the premises and habendum clauses could state the event of ownership being transferred, the premises clause prevails in the event of a conflict

What qualification must a seller meet in order to qualify for the capital gains income tax exemption? Profit is less than $250,000 for a single person Property sold must be an investment property Property must have been owned for at least one year of the previous three years All of the above

Profit is less than $250,000 for a single person The Capital Gains exemption is an Income tax exemption for profits realized on non-investment, residential property. The capital gains exemption shields a qualifying homeowner from having to pay otherwise applicable income tax on qualified profits realized from the sale of a principal residence. A single taxpayer is eligible for the $250,000 capital-gains exemption ($500,000 for married taxpayers) upon the sale of a principal residence owned for two of the preceding five years. Qualifying residences include single family houses, houseboats, mobile homes, cooperative apartments, and condominiums, so long as they are the homeowner's principal place of residence.

Which serves as constructive notice? A title search Estoppel Delivery in person Proper recording

Proper recording

Doug dies intestate and there are no heirs identified what happens to doug's property Property goes to the executor Property reverts to previous owner Property goes to the state Property goes to the lender

Property goes to the state Escheat is when a private person's property returns to the state. This happens when a person dies intestate, without a will, and heirs cannot be identified.

A court action to remove a cloud from the title is called an action or suit for Specific performance Title insurance Quiet title Legal injunction

Quiet title A court action (suit) for the removal of a defect, cloud, or claim against the title of a property is called a suit to quiet title.

Which act regulates the closing procedures in a real estate transaction ECOA RESPA FIRPTA HELOC

RESPA (Real Estate Settlement Procedure Act) regulates closing procedures in order to ensure that lenders: fully inform buyers and sellers of all settlement costs; and do not engage in unfair practices. It also limits who may conduct a real estate closing (settlement agent) and imposes further obligations on settlement agents

Quincy sold a piece of property to Ralph, and transferred title through a quitclaim deed. Later, a court determined that Quincy did not own the property. Which of the following statements is true in this situation? Ralph owns the property because the court action happened after the transfer of title Ralph has no interest in the property Ralph has a good claim against quincy for misrepresentation B and c

Ralph has no interest in the property With a quitclaim deed, the grantor does not promise that he has any interest or rights to convey. Because Quincy had no interest, he had nothing to sell, and Ralph has no interest in the property. On these facts, Ralph has no basis for a suit because through the quitclaim deed, Quincy never asserted he had an interest at all.

Bill and Sue want to purchase the home that is occupied by their grandparents. However, they want to take title in such a way that will result in the least amount of income tax liability for themselves. How should a real estate sales agent advise them? Take title as tenants in common with their grandparents Acquire title as joint tenants with each other Take title as tenants in common but each with an equal interest Refer bill and sue to an attorney or tax advisor

Refer bill and sue to an attorney or tax advisor This is a problem that licensees should NOT get involved in. Tax matters can be very complex and licensees providing tax guidance could constitute an unauthorized practice of law.

An owner going through foreclosure has a designated period of time to repay the loan amount and keep title to the property, this is called? Short sale Right of redemption Public auction Strict foreclosure period

Right of redemption

An owner going through foreclosure has a designated period of time to repay the loan amount and keep title to the property, this is called? Strict foreclosure period Public auction Short sale Right of redemption

Right of redemption

The covenant in a deed where the grantor guarantees that she owns the property and has the right to sell it is known as Seisin Against encumbrances Warranty forever Quiet enjoyment

Seisin A covenant of seisin is a promise by the grantor (seller) to the grantee (buyer) that the grantor actually has the degree of ownership that she's claiming to convey.

WHich of the following is not typically a closing cost reflected on a closing disclosure Hazard insurance City and county stamps/fees Sellers bonus/gift to agent Interest

Sellers bonus/gift to agent

Which type of loan is not exempt from RESPA disclosure requirements Single family home private residence loans Mobile home loans Reverse mortgages HELOC Loans

Single family home private residence loans

Gill had a bad year. In September 2014, Gill's vacation home had a 1st mortgage, a mechanic's lien, and a special assessment filed against it. Later, in May 2015, a second mechanic's lien was filed against the property. Which lien has priority? Mortgage 1st mechanic's lien Special assessment 2nd mechanic's lien

Special assessment Because special assessments are a form of real property tax, it would have priority over all the other liens. Real estate property taxes take priority over other types of liens, regardless of their date of recording

What is the difference between ad valorem taxes and special assessment taxes? Special assessments are only collected from select people and ad valorem are collected from all property owners Ad valorem taxes are only collected from select people and special assessments are collected from all property owners Special assessments are based on the unique assessed value of property and ad valorem are based on improvements Both B and C

Special assessments are only collected from select people and ad valorem are collected from all property owners

Dan has a loan secured by his home through a bank trust company. Dan has failed to make several mortgage payments to BTC and as a result BTC starts sending collection notices. If dan files for bankruptcy BTC must Send dan a notice of acceleration before it can continue the collection efforts Send dan a notice of foreclosure before it can proceed Send dan a notice of forfeiture Stop all collection activity during the pendency of dan's bankruptcy petition

Stop all collection activity during the pendency of dan's bankruptcy petition Answer D is the best answer because a petition for bankruptcy protection causes an automatic stop (stay) of all litigation and/or collection attempts by creditors (including mortgage lenders). Therefore, pursuing any kind of collection action, like acceleration or foreclosure, would be improper. A notice of forfeiture would be a form of collection activity, but would not be sent by BTC since forfeiture is used for the breach of a land installment contract, not the breach of a mortgage contract.

The covenant in a deed where the grantor guarantees that no one has any other interest in the property that will disturb the grantee's possession is known as: The covenant of quiet enjoyment The covenant of seisin The covenant of further assurances The covenant against encumbrances

The covenant of quiet enjoyment

What is the covenant in a deed where the grantor guarantees that no one has any interest in the property that will disturb the grantee's possession? The covenant of further assurances The covenant against encumbrances The covenant of quiet enjoyment The covenant of seisin

The covenant of quiet enjoyment The convenant of quiet enjoyment promises the buyer's possession of the land will be defended against hostile claims. Further assurances means that the grantor will execute any other documents necessary to perfect the title. Encumbrance means that there are no outstanding debts, except those stated in the deed. Seisin means ownership.

All of the following are true regarding capital gains except The exemption only applies to single family houses Can e short or long term The exemption is $250,000 for single and $500,000 for married It is a taxable profit gained during a property sale

The exemption only applies to single family houses

Stella has been late on her house payments for 6 months and recently received notice of foreclosure action. Today Stella lost her job and will have to file for bankruptcy, what effect will the bankruptcy have on the foreclosure? The foreclosure action will cease until the bankruptcy is granted or denied The foreclosure will cease for 30 days but after that the action will proceed None, the foreclosure action will proceed as detailed in the notice

The foreclosure action will cease until the bankruptcy is granted or denied

What is the biggest risk to a lender when it forecloses on a mortgage It will not be able to collect from second trust It can't recover enough money to satisfy the existing debt It is difficult to sell foreclosed property The lender could assume the role of property manager

The lender could assume the role of property manager The bank does not want your house--they want your money. If they foreclose on the house and no one outbids them, the bank may become responsible for additional expenses like the upkeep, maintenance, and management of the property, which is not their primary business. Such repossessed property is known as Real Estate Owned (REO) property.

Each closed real estate transaction requires a report to be filed with the IRS on form 1099. Who is required to file the form? The closing/settlement agent The real estate agent The buyer The seller

The real estate agent

For closed real estate transactions a report must be filed with the IRS on form 1099-s. Required information includes the seller's name, social security number, and The buyers name and social security number The selling price of property The name of a mortgage lender A description of the property

The selling price of property The selling price of the property is included on the 1099-S. This is the amount of income the seller received. At tax reporting time, this sale is subject to adjustments when calculating the actual tax due

Which of the following statements is not true about a title search? It is an examination of public records The purpose is to determine any defects in the chain of title The title searcher goes back at least 100 years It is usually performed by a title company or title abstractor

The title searcher goes back at least 100 years Title examiners must research the public record at least 40 years prior to the date of examination. As such, title searches only NEED to go back 40 years. Abstractors, or title examiners, examine the public record in order to determine whether the title is marketable or free from defects.

A court action to remove a cloud from the title is called an action or suit: For specific performance Of legal injunction To quiet title For title insurance

To quiet title

All of the following situations represent a transfer of real property upon the death of an owner except Escheat to the state Transfer by devisee Transfer by descent Transfer by eminent domain

Transfer by eminent domain Eminent domain is the right of government to take ownership of private property, so long as it is taken for a legitimate public use and just compensation is paid to its (still alive) owner. Escheat is when a deceased owner has no will or heirs, so the property transfers back to the state. If there is a will, the title immediately passes to the person it is devised to in the will. Transfer by descent states that in the absence of a valid will, the living heirs will inherit the estate.

What distinguishes one type of deed from another Type of property being conveyed Number of parties named in the deed Time frame of deed Type of covenants in the deed

Type of covenants in the deed The major differences distinguishing one type of deed from the other are the types of covenants (or promises) made by the grantor (seller). Such covenants include: seisin (grantor has proper ownership), quiet enjoyment (peaceful enjoyment without hostile claimants), against encumbrances (all encumbrances are disclosed in deed), further assurances (grantor will perform future acts to perfect title), warranty forever (assures grantee of possession and continuance of title).

All of the following circumstances are examples of insurable title defect except Forged documents Undisclosed heirs Mental incompetence Unrecorded easements

Unrecorded easements All of the listed items, except unrecorded easements, are commonly insured title defects. Unrecorded easements and other rights of parties in possession are generally excluded. Also excluded are facts that an accurate survey would reveal, taxes, assessments not yet due or payable, zoning, and other governmental restrictions.

When does a will legally take effect? Upon signing by the testator Upon delivery to the executor Upon the death of the testator Upon the death of the executor

Upon the death of the testator A person who has a will is called a "testator." The will informs interested persons (relatives, friends, creditors) how he wishes to distribute his estate (real and personal assets) after death, but it has no legal effect until the death of the testator. The executor is the personal representative named in the will to carry out the instructions of the will.

Bob, a World War II Veteran, imposes a deed restriction on his property, which prohibits the sale of his home to anyone from France. Bob's deed restriction is: Voidable Void Illegal B and c

Void Illegal covenants are void (not voidable) and unenforceable. Discrimination based on national origin is illegal under fair housing laws; therefore, Bob's deed restriction is void and unenforceable. While Bob's restriction is arguably irrelevant since it is unenforceable, that answer choice is not the "best" choice because it expresses an opinion.

RESPA requires Loan estimate to be given to borrower within 3 days of loan application Closing disclosure be provided 3 days prior to closing Title searched prior to all property closings A and B

a and b

Who would not usually perform title searches? An examiner An abstractor A real estate salesperson The same company that issues title insurance on the property

a real estate salesperson A person who performs a title search is known as a title examiner or abstractor. To promote its own interests, the same company that insures title usually conducts the title search. Real estate salespersons do not generally perform title searches.

A property is sold and the seller's lender agrees to release its lien even though the lender will receive less than the full outstanding balance of the loan this is known as A short sale Interstate succession A refinance Loan ratio

a short sale Answer A, short sale, is the best answer because the question posed is the definition of a short sale, where a lender agrees to release the lien for less than what is currently owed by a defaulting borrower. This enables the owner to sell even though the proceeds won't fully satisfy the existing lien. The other answers are not correct because they do not involve a lender agreeing to release a lien for less than the balance of a loan. Intestate succession is when a person dies without a will and the law determines who will inherit the property. A refinance is when the owner pays off the entire amount owed to the lender, replacing the existing loan with a new loan. Loan-to-value ratio is simply the relationship of the loan amount to the value of the property.

Which of the following items is evidence of marketable title? A trust deed A warranty deed A title insurance policy an affidavit

a title insurance policy Title insurance is a risk management tool offering policy holders limited protection against title defects or encumbrances discovered after the sale of real estate.

Who pays excise taxes? Grantor Grantee Broker A and b

A and b An excise tax is a tax assessed for a service. For the grantor, excise taxes may include transfer taxes paid at settlement. For the grantee, excise taxes may include recordation taxes.

Deed restrictions apply to: Current owners Subsequent owners All property owners in a neighborhood A and b

A and b Deed restrictions run with the land, and therefore apply to the current owner and any other person who later occupies the property. While other homes in a neighborhood may have similar deed restrictions (for example, in developments), each deed restriction only applies to its owner.

Which type of property exchange is exempt from paying excise tax (transfer tax)? Correction deeds Transfers between family members Sale with a general warranty deed A and b

A and b Transfer taxes are generally paid by the seller, grantor, or lessor, and are due when the deed is recorded. Transfer taxes are generally paid by purchasing a stamp from the official in charge of recording deeds. This stamp is affixed to the deed as evidence the tax was paid in full. Transfer taxes are usually based on the sales price of the property (such as $3.00 tax per $1,000 of sales price). Commonly exempted transfers include: mortgages, correction deeds, and transfers between husband and wife, or parent and child.

Victor Vendee purchased a home from Veronica Vendor under a land installment contract. Victor has not made any of the required monthly payments in the last 4 months. Assuming applicable state law allows, which of the following choices is available to Veronica as remedy for Victor's default on the contract ? Send victor a notice of foreclosure Send victor a notice of forfeiture Begin the forfeiture p process, with no notice required A and b

A and b if applicable state law allows, a vendor under a land installment contract can either foreclose under a vendor's lien theory, or declare forfeiture and regain the property. Therefore, A and B are both acceptable

The following scenario describes a person who dies intestate A person who dies while in a coma A person who dies without a will or living trust A person who dies with only one heir A person who dies somewhere other than their state of legal residency

A person who dies without a will or living trust

When a person dies the property they owned passes to their heirs named in a will. What has to happen prior to the actual transfer of property to the heirs? The will has to be read, signed and notarized by all parties named in the will All parties named in the will have to be notified of the death and their right to property The property in the will has to be separated by real and personal property A probate proceeding must be opened

A probate proceeding must be opened

Which of the following is used by the buyer and seller to agree on the status of title? Actual notice RESPA Abstract of title Deed of trust

Abstract of title An abstract of title helps determine marketability of a title, it is a condensed history of a title to specific real estate, which includes encumbrances, transfers, conveyances and other recorded information that is all relevant to the marketability of the title.

Which of the following clauses would not be found in a will? Habendum clause Testimonium clause Premisis clause Acceleration clause

Acceleration clause

When the grantor of a deed swear that he is conveying title of his own free will this action is referred to as Execution Acknowledgement Novation Authentication

Acknowledgement Swearing that the grantor passes title (in a deed) of his own free will is usually done before a notary public or some other official. This is called acknowledgment.

What term best described the process of taxing real estate according to its value Ad valorem Assessment Appraisal Special assessment

Ad valorem Ad valorem means "according to value", which describes the general method of arriving at the real estate tax. Each property is taxed "according to its own value".

Tax assessment of real property according to value is known as Appraisal Ad valorem Replacement cost Capital gain

Ad valorem One of the two principal methods of assessing real estate taxes is ad valorem, the other method is by special assessment. "Ad valorem" is Latin for "according to value." Ad valorem taxes are based on the unique assessed value of the subject property

If a real estate broker refers a client to a particular settlement service or mortgage broker what must they provide the client Closing disclosure Servicing disclosure statement Special information booklet Affiliated business arrangement disclosure

Affiliated business arrangement disclosure Sometimes, several businesses that offer settlement services are owned or controlled by a common corporate parent. These businesses are known as "affiliates." When a lender, real estate broker, or other participant in settlement refers borrowers to an affiliate for a settlement service (such as when a real estate broker refers a client to a mortgage broker affiliate), RESPA requires the referring party to provide borrowers with an Affiliated Business Arrangement Disclosure. This form reminds borrowers that they are generally not required, with certain exceptions, to use the affiliate and are free to shop for other providers.

Janet recently passed away and her will was submitted to probate. Her probate estate consists of All of janet's personal property All of janet's real estate All of janet's real estate and personal property All of janet's personal property and that her executor choses to include in the probate estate

All of janet's real estate and personal property Probate estate consists of all of the decedent's personal and real property. The executor named in the will does not have the right to choose what property is part of the probate estate.

What benefit would an owner get from a deed in lieu of foreclosure Cancellation of entire debt Avoid publicity of foreclosure Avoid a deficiency judgment All of the above

All of the above A deed in lieu of foreclosure or "friendly foreclosure" is when the borrower and lender agree to transfer property by deed from the borrower to the lender and the lender cancels the entire debt. This is beneficial to both borrower and owner in saving foreclosure expenses. Also, the borrower escapes the publicity of the foreclosure and potential deficiency judgements while the lender escapes the uncertainty of judicial foreclosure and public auction.

Which of the following is considered a title defect? Mechanics lien Improper recording of ownership Missing signature All of the above

All of the above A defective title means that the title is not marketable. One example of a defective title is land being sold by a party claiming to have good title, but which is actually owned by someone else. Other defects may include: • Improper recording of ownership • Failure to include the signature of a party that is necessary to the transaction, such as a spouse • Previous liens and other encumbrances have not been removed (the title needs to be free of encumbrances to be marketable) • Mechanics lien if the seller failed to pay the contractor for an improvement to the home. The contractor can place a lien on the property for his/her unpaid labor. • Tax Liens if an owner failed to pay his/her taxes and a certificate was sold in the amount of the unpaid taxes.

Escrow may be used in which of the following situations? When property is purchased and secured by a deed of trust In an exchange of property With a contract for sale All of the above

All of the above Escrow is the holding of money, documents, etc. by a third party until the conditions of a contract have been satisfied by the principal parties. Escrow is commonly used in most real estate transactions, including the closing of mortgage loans and property exchanges.

In accordance with RESPA what must lenders provide to borrowers within 3 days of a new loan application Loan estimate Special information booklet Homeownership counseling All of the above

All of the above RESPA requires that borrowers receive disclosures at various times and identifies certain prohibited acts. The required disclosures include a Special Information Booklet (guide to mortgages, closing costs, general homeowner advice), Homeownership Counseling (list of Federally approved homeownership counseling organizations), Loan Estimate (settlement services charges the borrower will likely have to pay).

A condensed history of the documents affecting real property is known as: An affidavit of title An abstract of title The chain of title An abstract of judgements

An abstract of title

A condensed history of the title to specific real estate including all documentation regarding transfers, conveyances, encumbrances and other recorded information affecting the property is known as: The chain of title An abstract of title An abstract of judgements An affidavit of title

An abstract of title The condensed history of a title is an abstract. A chain of title is similar, but not as complete. An affidavit of title is the swearing that there have been no encumbrances incurred since the title search. A abstract of judgment is a court document allowing claimants (creditors) to place liens on property owned by debtors.

In a like kind (1031 exchange) what type of property must be exchanged? Single family homes used as primary residences Agricultural properties Rental properties B or c

B or c In a like-kind exchange (also known as 1031 exchange based on IRS code 1031 under which one can avoid capital gains taxation), both the property given up and the property received must be held for investment or for productive use in a trade or business. Land, machinery, buildings, trucks, and rental property are examples of property that may qualify.

Each closed real estate transaction requires a report to be filed with the IRS on for 1099-s. Who is required to file this form? Seller Settlement agent Mortgage lender B or c

B or c In a typical closing there is a settlement agent and the settlement agent is responsible for filing the 1099-S. If there is no settlement agent, then the mortgage lender would be responsible for filing the form.

Bill sells real property to Betty through an escrow closing. Bill relinquishes control of the deed, but Betty does not receive it. What most likely happened to the deed? It was sent to the mortgage company It was placed in a safe deposit box The brokers office filed it Bill delivered it to an escrow agent

Bill delivered it to an escrow agent Note that the question states this is an escrow closing. In an escrow closing, the deed is placed in escrow, where the grantor relinquishes his control of the deed. The escrow agent delivers the deed to the grantee upon the completion of agreed upon conditions (usually specified in the sales contract).

A quitclaim deed may be used to Transfer ownership of a fee simple state Transfer interest in life estate Terminate and easement Any of the above

all of the above

If a deed transferring legal title from one party to another is NOT recorded in the public record, which of the following statements is correct? The deed is valid The grantor gives up all rights to th property conveyed The transfer is not valid Both A and B

both a and b

Ann agrees to purchase Gia's property for $85,500. Ann deposits the purchase price with Vic, and Gia deposits a warranty deed for the property with Vic. Vic is instructed to record the deed in Ann's favor when Gia shows good title to the property. Vic is also instructed to pay the purchase price, less some agreed prorations to Gia when Ann has received the deed. This transaction is best described as a(n): Provisional sale Closing in escrow Installment sale Option

closing in escrow There are two types of closing formats: closing in person and closing in escrow. In a closing in escrow format the escrow agent follows the instructions of the buyer and seller as a neutral third party to hold property or perform specific acts. Both parties deposit all documents and money necessary for closing with an escrow agent and when the agent is satisfied the seller and buyer have met all obligations the agent delivers funds to the seller and title to the buyer.

Which type of will may not be valid in all states? Pour over will Holographic will Simple will Testamentary trust will

holographic will

Federal income tax regulations allow a homeowner to reduce taxable income by amounts paid for Repairs and maintenance Hazard and insurance premiums Real estate taxes Principle payments

real estate taxes Homeowners may deduct mortgage interest payments, real estate taxes and some closing costs from Federal income tax.

A house sold for $109,000 with the buyer making a 20% downpayment. The grantor's tax is based on the Downpayment Loan amount Selling price None of the above

selling price The grantor's tax, also known as the transfer and/or recording tax, is based on the selling price of the property. It is customary in many jurisdictions for the grantor (seller) to pay the grantor's tax.

Which of the following actions is required to transfer title to property by deed? The deed must be recorded in the public record The deed must be signed by the buyer The deed must be signed by the grantor B and C

the deed must be signed by the grantor Title passes after the deed has been delivered and accepted. The grantor (seller) must sign the deed, but the grantee (buyer) does not need to sign the deed so long as the grantee is identified.